Expand your business by accepting debit card and credit cards.
There are several clear benefits to accepting credit and debit card payments in your business. You give your customers the ease of paying by mobile phone, by tablet, online, or in a store.
To obtain the most out of accepting credit cards, spend some time to read more about who you’ll work with to process payments, how you can get set up, how you can stay clear of problems, what to try to find in a processor, and effective ways to keep your fees low.
Every time you accept a credit or debit card payment, several organizations cooperate to complete the transaction. The key players include:
1. Merchant bank: The financial institution that offers you with a merchant account. The merchant bank will handle credit card transactions to your savings account and charge a fee called a discount rate.
They’re authorized to set up merchant accounts, quote you a discount rate, and route credit card transactions to the right networks. The benefits to you may include better customer service and integrated business solutions (beyond just accepting credit cards). Processors are paid on a per transaction fee basis, which is included in your discount rate.
3. Issuing bank or issuer: The banks that provides the credit card to the end user.
4. Card payment brand: Associations like Visa, MasterCard, and American Express. They charge you an interchange fee, which they show the issuing bank. Some brands including American Express and Discover issue cards directly to consumers, without a bank intermediary.
Get started with credit card processing
1. Choose your payment processing services provider. There are many processors on the market, so shop carefully. Learn more below about what to seek in a provider. Note: QuickBooks Payments offers a full payment processing solution for merchants.
2. The processor will have you establish a merchant account based upon your kind of business.
3. Decide how you’ll accept credit cards: in QuickBooks, on mobile phones or tablets, or at the point of sale.
4. As quickly as you swipe the card, the details will be forwarded to your processor. You can either swipe the card or type card information into your payment processing system.
5. The processor will submit your request to the card payment brand, such as Visa ® or
MasterCard ®. 6. The card payment brand will send your request to the bank that issued the card to the customer.
7. The issuer will decline the transaction or approve and send this response to the payment brand.
8. The payment brand will send out the response to the processor.
9. The processor will forward the response to you (through the payment processing system, whether it’s mobile, website, online, or point of sale).
10. The card will be approved, declined, or referred for purchase. All this takes simply a few secs to finish.
The issuing bank will send the money through the credit card network to your bank account (within 2-4 business days). Whether you use a credit card machine, QuickBooks, or a mobile credit card reader, every credit card transaction will follow these same basic steps.
1. Learn all the fees, charges, rules, and regulations in your merchant account agreement.
2. Check the identity and expiration date on any card you’re about to process.
3. Prevent duplicate transactions.
4. Don’t put minimum or maximum limits on your transactions. Regulations state that you must accept credit cards for any size of transaction.
5. Don’t offset the cost of accepting credit cards by charging a usage fee for credit card transactions.
6. Don’t display full account numbers on your receipts. Each state’s laws regulate how much information can appear.
7. Get to know the fraud screening products and services that can help you.
8. Use the right accounts for your business. If you try to process Internet transactions with your retail merchant account, you may face steep fines and lose your merchant account.
9. Never run your personal credit card through your merchant account.
10. Don’t split a transaction into smaller transactions. This could put you at risk of a chargeback.
11. Prioritize customer issues above everything else.
Your payment processor can help you get much more out of accepting credit card payments. Here’s how to choose the right partner for your business:
1. Learn about all the fees associated with accepting credit cards, and find out whether there’s a termination fee for switching providers.
2. Find a provider that will actively partner with you to get you started, support you when you run into problems, and help your business grow.
3. Be sure your payments solution will allow you to grow with use of point of sale, online credit card processing, and mobile credit card processing.
Look for a payment processing system that’s integrated with your accounting software. It allows you to process and record a credit card transaction in one easy step.
Reducing credit card processing costs
Be sure you understand all the fees and key factors involved when you’re shopping for a provider. Accepting credit cards will introduce you to many previously unfamiliar industry terms. To make sure you’re ready, get to know the following terms:
1. Authorization fee: For some transactions, the cardholder and card won’t be present. The fee may be listed separately or bundled with your rate.
2. Card association: For any credit card brand, the card association is the network of issuing and acquiring banks that process it.
3. Chargebacks: Within 60 days of the statement date, the cardholder can dispute a charge. Their complaint will go to their issuing bank. Next, you’ll receive a retrieval request, for which you’ll pay $10 to $50. Respond promptly, or you could face an additional fee or lose the transaction completely. After a refund, you’ll often lose the interchange fee from the original transaction as well as the sale.
4. Interchange fees: Most major card associations charge an interchange fee for processing each transaction. You’ll pay different fees depending on how the transaction is sent and what type of merchant account you have.
6. Issuing bank: The issuing bank extends the line of credit to a consumer and offers you a payment card.
7. Merchant bank: Your merchant bank is the financial institution that provides you with a merchant account. It will also take care of payment of all your credit card transactions and credit card processing.
8. Merchant service provider: Your merchant service provider makes sure your account is set up to handle credit card transactions on the front and back end. They’ll also serve as the intermediary for your communication with card associations, processors, and your bank. One example is QuickBooks Payments.
11. Payment gateways: Your payment gateway transmits payment data from you to card associations and credit card processing companies. Payment gateways support most point-of-sale systems, banks, processors, and merchant types. A front-end processor handles up-front card authorization, connectivity to card associations, and network authorization. A back-end processor receives and forwards settlement batches to the issuing banks on a regular schedule.
12. Qualified rate: The qualified rate is typically the lowest rate you’ll receive. It’s the percentage that’s charged whenever you process a card transaction through an approved processing solution.
13. Rates: The rates you pay cover transaction processing and the depositing of funds into your account. This rate may bundle the fees of your merchant service provider, processor, issuing bank, and card association. Swiping a card in person will often give you the lowest rate. See qualified rate, mid-qualified rate, non-qualified rate.
14. Payment gateways: Your payment gateway transmits payment data from you to card associations and credit card processing companies.